Andreas Andreou
By Andreas A. Andreou*
2024 was both literally and figuratively a leap year. Metaphorically speaking, we anticipated this shift a year ago as we reflected on 2023 and made our predictions for the year ahead. As expected, 2024 turned out to be slightly to moderately challenging. Despite efforts to maintain the momentum of 2023, the reality was a dip in foreign buyers and slightly lower trading volumes. On balance, the market moved from slightly negative to largely stable compared to the previous year.
This year begins with a more optimistic outlook. The European Central Bank (ECB) has consolidated interest rates at lower levels following successive cuts, and Cypriot banks, albeit belatedly, have followed suit. While the effects of these rate cuts may not be immediate, they are expected to yield positive outcomes in the medium to long term. Lower rates should encourage both new lending and the restructuring of existing loans, providing much-needed relief for households and businesses. This, in turn, could stimulate renewed demand and invigorate the property market.
In 2024, the foreign buyer segment saw a decline of 10%-12%. However, an increase in domestic demand helped offset most of this loss, keeping the market relatively stable. The luxury property market, especially in Limassol, experienced a noticeable drop in activity, which affected the city’s overall performance. Even so, the luxury segment is far from lost—transactions are still happening, and there’s potential for improvement in 2025.
Housing policy was a key issue in 2024, bringing attention to the challenges faced by low-income earners and students. While government measures are moving in the right direction, there’s room for improvement. Enhanced and expanded initiatives could yield better outcomes for these vulnerable groups. Encouragingly, new measures introduced towards the end of 2024 are expected to provide additional support in 2025. However, complacency must be avoided—continued efforts are needed to address housing issues comprehensively.
The self-regulatory system for development project permits has streamlined the approval process, accelerating supply and acting as a valve to ease price pressures. Extending this system to larger projects in 2025 is expected to further benefit the market. However, there’s a downside: simplified permitting often leads to uninspired architectural designs that can harm neighborhood aesthetics. Addressing these architectural shortcomings should be a priority for 2025 and beyond.
Construction costs remain high, influenced by global geopolitical developments and commodity price volatility. While inflation has subsided, a reduction in construction costs seems unlikely. A medium-term stabilization appears to be the most realistic scenario, but the long-term trend points upwards.
The residential sector will likely continue to attract the most investment interest, with the office and industrial property markets following closely behind. We also expect a rise in plans for new tourism developments, driven by record-breaking performance in the sector and the gradual extension of the tourist season.
Several long-awaited public projects are expected to be completed in 2025. These include the redevelopment of the old GSP Stadium in Nicosia, Salina Municipal Park in Larnaca, and the Polytechnic School at the University of Cyprus—landmark developments that will enhance their respective areas. There’s hope that the Medical School, Biological Sciences, and Teaching buildings at the University of Cyprus, as well as the Liopetri River redevelopment project, will also be completed, though delays have raised concerns.
Looking ahead, a dominant topic in public discourse is likely to be the regeneration—or redefinition—of Nicosia’s commercial center, particularly Makarios Avenue. This pivotal issue could reshape the city’s future and deserves widespread attention.
As we step into 2025, the outlook for the Cypriot property market is cautiously optimistic. Challenges remain, but with the right policies and strategic investments, the year ahead holds promise for growth and development.
*Andreas A. Andreou, MRICS, is the CEO of APS Andreou Property Strategy - Chartered Surveyors.
**This op-ed was translated from its Greek original
